Conservative Magical Thinking (Voodoo Economics)

Voodoo economics - it's still with us. In fact, magical thinking has completely taken over the Republican Party. I took that graphic from Jonathan Chait's recent column in The New Republic, but he has another that's even better. After discussing what we really need to do to shrink the deficit, he continues with this:

So now we're down to raising taxes by 1.5% of GDP and cutting spending by 1.5% of GDP. That's not all that hard. In fact, recent history suggests that as the economy recovers, the deficit will shrink even faster than CBO projects.

Now, it's true that creating the political will for such changes is difficult. But a big part of the reason it's difficult is that conservatives reject out of hand any bargain that includes tax increases. Conservatives revolted against the 1990 budget agreement, which included some tax hikes and significant spending restraint. Republicans unanimously denounced Bill Clinton's 1993 deficit reduction as an economy-killer that would increase spending and the deficit. Here's what actually happened:

See that period in the 1990s, when the light blue spending line goes down and the dark blue revenue line goes up? That's the effect of the deficit reduction deals that conservatives continue to regard as unthinkable. Now, you might say it's a reflection of the 1990s business cycle, and that's partly true. But contrast it with the 1980s business cycle, when the deficit got big and stayed big. Or the 2000s business cycle, when revenues collapsed and only partly recovered even at the peak of the business cycle. The one period of time when federal spending actually declined on a continuous basis was when policymakers had implemented tax hikes. That's the period when George H.W. Bush and Bill Clinton were clawing back the Reagan tax cuts. The periods when outlays were rising were when tax cutters Ronald Reagan and George W. Bush were in the saddle.

Interesting graph, isn't it? Click to enlarge it, if you wish. Ronald Reagan was president from 1981 to the beginning of 1989. That's when Republicans first decided that deficits didn't matter, or at least didn't matter as much as tax cuts for the rich. The first President Bush (1989-1993) famously - and rightly - labeled it "voodoo economics," before he finally bowed before the lunatics in his party. But he did raise taxes near the end of his term, violating his idiotic "read my lips" pledge, but starting us on the road to shrinking Reagan's deficits.

Bill Clinton served from 1993 to the beginning of 2001. Under his leadership, we cut spending, increased taxes, and didn't just narrow the deficit but actually produced surpluses. Far from being an "economy killer," as the right-wing prophesied, America's economy boomed. But you know what's coming next, don't you? Disastrously, Bush Junior was in office from 2001 to 2009. There's pretty much nothing he did right, but he was certainly a disaster for our economy. Increasing spending, combined with tax cuts for the rich - and starting two wars without paying for them - ending with the worst economic collapse since the Great Depression... Well, it's hard to imagine the Republicans could have done worse if they'd been trying to destroy our country.

President Obama took office at the beginning of 2009, with quite possibly the worst starting conditions of any president in our history. (Franklin D. Roosevelt had the Great Depression, but not even one war, not at the beginning of his first term.) Look at the graph. Why aren't the Republicans hiding their heads in shame? And how could they still be pushing voodoo economics? Chait thinks that tax cuts for the rich is their only real goal. They just don't care much about anything but that.

Certainly Republicans talk a lot about spending cuts, but never seriously. They never propose anything meaningful. Take their latest gimmick, online voting for spending reduction. I like Nobel Prize-winning economist Paul Krugman's take on that:

Now that’s pathetic. Via Steve Benen, Eric Cantor is calling on the public to “vote” on spending cuts — like eliminating $1 million, that’s right, $1 million — in HUD dissertation grants. Because nothing does more to ensure that taxpayer money is well spent than making sure that nobody actually studies what works and what doesn’t.

As Benen points out, however, the real story here is that the sums involved are ludicrously trivial; eliminating everything on Cantor’s list would amount to a rounding error on federal spending.

Meanwhile, of, course, the GOP went wild against real efforts to control spending, crying “death panels.”

The truth is that it has always been like this. Ever since Reagan, the conservative approach has been to talk about the need for smaller government, but refuse to offer any serious proposals for spending cuts, pretending instead that there are large sums being wasted on things nobody wants.

When Republicans talk spending cuts, they're either so vague as to be completely laughable ("cutting waste" is always a good one, since who could be against that?) or ridiculously petty (involving sums that sound impressive to the average voter, but - as Krugman points out - would be no more than the rounding error in the federal budget). A million dollars is a lot of money, yes. But nationally, it amounts to one-third of a penny per person per year.

[Of course, some of those petty cuts show almost incredible ignorance, too. Remember Bobby Jindal wanting to cut funds for volcano monitoring? Or Sarah Palin and fruit fly research? Admittedly, the whole Republican Party has become anti-science in recent years, but these are supposed to the GOP leaders. Oh, yeah, I forgot. Intelligence and education are elitist, aren't they?]

Anyway, here's another graphic I find interesting:

That's probably hard to see. You might want to click on it to get a bigger size. It's from Andrew Sullivan in The Atlantic, apparently, but I don't have a link to the associated article. Still, it's simple enough to figure out by itself. It simply compares where people want to cut federal spending with where we're actually spending it.

I always think it's funny to hear tea-baggers who are adamant about protecting their own Social Security and Medicare from cuts (although, how dumb do you have to be to think you need Republicans to protect these programs from Democrats?), and who want even more spending on defense, but expect to balance the budget by cutting foreign aid or environmental protection. Oh, yeah, let's not forget about "waste," the duplicitous politician's favorite target.

Talk about magical thinking! Is it any wonder we laugh at these people? It's either laugh or cry, don't you think? I can laugh as long as they're out of power. But if they ever get back in power again, there will be plenty to cry about. Let's hope Republicans find their sanity again before that!